Monday, October 24, 2011

Wow. Netflix (NFLX) Down 27% After Hours

The stock that crushed so many shorts the past few years, Netflix (NFLX) has had a terrible past few months.  To put the cherry on top, the stock is down some 27% in after hours as I type.  At $~$85ish the stock is at its lowest point since... April 2010.  What an amazing fall...

[chart does not show after hours print]

File this one for memory under title 'when momentum stocks reverse'.  Or 'how not to anger your customer base'.
  • The company’s U.S. subscriber base fell 810,000 to 23.79 million; international subs rose 510,000 to 1.48 million.

Via IBD:

Netflix (NFLX) beat analyst views but set a disappointing fourth quarter forecast Monday tied to DVD-customer losses after a change in subscription pricing. Netflix stock dropped 27% after hours, following a 1.5% rise during the trading day. Netflix said it ended the quarter with 21.4 million streaming subscriptions and 13.9 million DVD subscriptions. Domestic subscribers fell to 23.8 million from 24.6 million in the second quarter, as higher than expected cancellations came in.

The company said after the stock market close that it earned $1.16 per diluted share in the third quarter, up 66% from a year earlier and far ahead of analysts' views for 94 cents. The streaming-video and DVD-by-mail company took in revenue of $822 million, up 49% from a year ago and ahead of analyst views for $812 million.

"We think DVD subscriptions will decline sharply this quarter, as reflected in our guidance, due to our price changes," the company said in its third quarter earnings release.

It anticipates that total unique U.S. subscribers overall will be slightly up in the fourth quarter. Netflix sees the fourth quarter coming in with 20 million to 21.5 million domestic streaming subscriptions and 10.3 million to 11.3 million domestic DVD subscriptions.

The company sees fourth quarter earnings per share between 36 cents and 70 cents. (i.e. they have no idea with that wide of a margin!) Analysts polled by Thomson Reuters had been looking for $1.08. For revenue they had been looking for $919.6 million. Netflix forecast fourth quarter revenue at between $841 million and $875 million.

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